It’s the ideology, stupid: understanding US tax reform

Keenly overseen by unfettered commentary from the Presidential Twitter pulpit, the United States House of Representatives voted to pass a bill on Friday that will rearrange the corporate and private citizens’ federal tax structures to the tune of USD$1.3 billion in cuts.

Among these cuts is the reduction of corporation tax from 35% to 20%. Some representatives view this as a restructuring which moves money from their constituencies to pay for cuts elsewhere. Republican Representative Lee Zeldin, for example, opposed the bill for the effect it would have on his community on Long Island, New York.

While the specific details of the tax legislation have been discussed in depth on every major media outlet for the last few weeks, in order to understand the philosophy of such a bill it is important to consider the ideologies that underpin its creation.

The case for lower taxes

Primarily consisting of private sector personalities such as Jeff Bezos and Jamie Dimon, CEOs of Amazon and JP Morgan respectively, President Trump’s economic advisory committee operates on a belief in limited regulation, both privately and governmentally.

In April of 2017, the Chairman of the Committee on Economic Affairs, Kevin A. Hassett, a former economist at the American Enterprise Institute, wrote a piece detailing the necessity for corporate tax cuts. He noted that tentative signs of wage growth required tax reform in order to ”kick the economy into high gear”.

The belief in freed funds being best optimized by private entities, rather than the government, is a key determinant of policy from within this ideological framework. Logically, if one prescribes to the idea of the economy as a structure that exists as a result of the individual, and therefore is best managed by the individual, the tax cuts make sense, and corporations are free to redistribute assets where they see fit. Further, because corporate and private consumers’ interests are believed to be intrinsically linked, what is good for one is mutually beneficial for the other.

Sceptical of big government

Where most Americans perceive all of Europe to be “socialist”, they tend to pride themselves on the belief that the United States is unique because of the foundational tenets of the nation. Where socialism consolidates the power to a select group of individuals, with the expectation of a conscious allocation of resources throughout society, the scholar Ludwig von Mises summed up what would become the main thesis of the American right in its critique, that mortal men are liable to error, and legislators and judges are mortal men.

The first five amendments of the US Bill of Rights ensure the freedom to religious practice, to bear firearms, to avoid quartering troops during wartime, to be searched or have goods seized unlawfully and the right to avoid self-incrimination.

The Founding Fathers of the United States established these tenets with the individual in mind, versus the cohesive authority of the state. These have, the right believes, set the course for the country’s current stature in the international community, both militarily and economically.

As such, underpinning Republican ideology there is a desire to withhold as much wealth individually for fear of inevitable government overextension in the future – they would rather embrace a Hobbesian torment than a looming Leviathan in the form Bernie Sanders.

Opposing this belief is what is often described as the “American Left”, or as many outside of the United States see it, the centrists. “Socialism”, the evil epithet lobbed carelessly across boardrooms and Senate discussion meetings for the better part of the last sixty years, is used to describe those who advocate a heightened sense of collective responsibility.

During the presidency of Barack Obama, perhaps the best-known legislative manifestation of this came in the shape of the Affordable Care Act. This has levied a series of taxes affecting the lower 80% of earners in the United States, in order to help extend health insurance coverage to an estimated 13-14 million people. The goals of the ACA were to insure more people and attempt to reduce healthcare costs, which were valued as high as 17.5% of the United States’ GDP in 2014. Despite these soaring costs, US life expectancy was recently ranked just 26 out of 43 industrialised nations.

The ideology of collective responsibility, therefore, holds a belief in the power of men to cooperate with each other, for the betterment of a society that is at times incapable of bettering itself.

Understanding the other side

Who is to say which side is right and which side is wrong? For each evil neo-liberal greed monger on Wall Street, there is the possible philanthropic CEO who puts his own money forward to rectify societal concerns. Likewise, for each well-intentioned ideologue intent on a long-term solution to American societal woes, there is an egotistical, elitist, narcissist, who believes that he or she alone, with the powers afforded to them by virtue of governmental election, can apply theory and belief as the hand of a larger structure in order to work toward a supposedly brighter future.

Instead of arguing over such tribal labels as Republican and Democrat, the American people should work toward understanding what each party’s true beliefs are predicated upon, conversing along the way about the tangible benefits and drawbacks of each ideology. This might just hold the key to a less bitter and polarized country in the future.

Kyle graduated from St. Antony's College, Oxford with an MSc in Russian and Eastern European Studies in 2017, where he studied inter-generational memory of the Second Chechen War amongst Chechen populations of Georgia. He has spent considerable time in the region conducting fieldwork and is most interested in cultural memory of resistance, its representations and the ultimate impact it has on securitisation in the North Caucasus.

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